War of Words Continues Between White House, House Speaker McCarthy

WASHINGTON — President Joe Biden is continuing the war of words with House Speaker Kevin McCarthy, R-Calif., using successive public appearances this week to pan the speaker’s proposed plan to raise the debt ceiling as “the same old trickle-down dressed up in MAGA clothing. Only worse.”

The verbal jousting began on Monday, when McCarthy traveled to Manhattan to speak before an audience of prominent Wall Street figures and local Republican Party members at the New York Stock Exchange Institute.

McCarthy accused Biden of not being “sensible” during the speech, as he sought to gain the upper hand in negotiations with the White House over raising the debt ceiling.

During his remarks, McCarthy lambasted the president, accusing Biden of being out of touch, unresponsive, and of having “embraced a fantasy” when it came to the national debt.

As previously reported in The Well News, the speaker then went on to say that House Republicans would vote “in the coming weeks” on a bill that would lift the debt ceiling for only one year, leaving its future once again open to debate in 2024, a presidential election year. 

It would cut federal spending to 2022 levels and cap spending increases over the next 10 years to just 1% annually.

The plan would also impose stricter work requirements for those benefiting from social programs, claw back unspent COVID-19 relief funds, and he vowed that its as-yet unspecified spending cuts would occur “without touching Social Security and Medicare.”

The White House and congressional Democrats have already panned the proposal saying McCarthy has no real plan and is suggesting measures he first broached with Biden in January.

But the White House quickly rejected the framework, accusing McCarthy of “holding the full faith and credit of the United States hostage, threatening our economy and hardworking Americans’ retirement. 

“A speech isn’t a plan, but it’s clear that extreme MAGA Republicans’ wish lists will impose devastating cuts on hardworking families, send manufacturing overseas, take health care and food assistance away from millions of people and increase energy costs — all while adding trillions to the debt with tax cuts skewed to the super-wealthy and corporations,” White House Deputy Press Secretary Andrew Bates said.

On Tuesday, during an executive order signing in the White House Rose Garden, Biden himself joined the verbal fray.

“Yesterday, the speaker of the House of Representatives, Kevin McCarthy, went to Wall Street,” the president observed. “He did not tell the wealthy or the powerful on Wall Street that it was time to start paying their fair share of taxes.  

“That didn’t come up,” he quickly added, inspiring a peal of laughter from attendees of the signing.

“Anyway, I won’t … ,” he continued, as if trying to rein himself in, inspiring more laughter.

“Instead, he proposed huge cuts to important programs that millions of Americans count on.  Millions of middle-class suburban, as well as inner-city folks,” Biden said, roaring back into combat mode.

“He threatened to become the first speaker to default on our national debt, which took over 230 years to accumulate. He threatened to be the first one to default on the debt, which would throw us in a gigantic recession and beyond, unless he gets what he wants in the budget,” the president continued.  

“Folks, you’ve got to ask yourself: What are MAGA Republicans in Congress doing? Because this is not your father’s Republican Party. This is a different deal,” he said.

In January, Treasury Secretary Janet Yellen announced the nation is fast approaching the current debt limit, set at just over $31.38 trillion, and that the department had begun taking so-called “extraordinary measures” to meet its financial obligations.

Yellen also said that the so-called “X date” — the day those measures run out and the government would have an unprecedented default — could occur as early as June, but certainly some time this summer if the debt ceiling isn’t raised.

The Constitution grants Congress the “power of the purse,” and under current law exercises this power through the federal debt limit.

While some have suggested that the 14th Amendment may grant the president the authority to ignore the statutory debt limit, previous administrations have rejected that argument as an alternative to debt limit legislation.

Should the X date be reached with the current debt ceiling in place, the Treasury Department would effectively be legally bound not to fulfill its obligations to pay its bills.

Such an outcome, according to the Congressional Research Service, would dramatically reduce the Treasury’s ability to borrow funds on advantageous terms, thereby further increasing the federal debt; have substantial negative outcomes for global economies and financial markets; cause the U.S. to face substantial interest penalties from a delay on certain federal payments and transfers; and cause downgrades of U.S. credit ratings, which could negatively impact capital markets.

But the research service notes that even protracted deliberation over the debt ceiling could have real economic and fiscal consequences if concern over the talks start to alter household and business behavior.

McCarthy visited the White House shortly after Yellen’s announcement, but there have been no discussions since.

On Monday, the speaker accused the president of essentially stonewalling him, saying he had not “heard from the White House” since their meeting in February.

“President Biden has been missing in action and misleading the public,” McCarthy said.

Biden and congressional Democrats beg to differ, noting that the president released his fiscal year 2024 plan — a plan House Republicans dismissed as “unserious” — in March and that McCarthy and the House GOP leadership have yet to put forward an alternative or specify how they would go about bringing down the deficit.

Biden’s budget proposal includes trillions of dollars in spending and a series of tax increases, including a 25% minimum tax on billionaires, a 28% corporate tax and a doubling of the tax rate U.S. multinational firms pay on foreign earnings. Under the Biden plan, that rate would climb from 10.5% to 21%.

The White House tax plan also calls for a reversal of former president Donald Trump’s tax breaks for Americans earning more than $400,000 a year.

The Biden plan also calls for clawing back money from the pharmaceutical industry by negotiating drug prices, and from the fossil fuel-based energy sector, by eliminating tax subsidies for oil and gas companies.

Biden and his allies on the Hill, including Senate Majority Leader Chuck Schumer, D-N.Y., have called on Republicans to raise the debt ceiling without conditions, and contend differences over spending should be reserved for budget negotiations.

“President Biden and I are happy to meet with the speaker when he has something to talk about — a plan,” Schumer said on Tuesday. “If he comes there without a plan, what are we going to talk about, the furniture?”

But McCarthy has dug in his heels, insisting that any raising of the debt ceiling be tied to steep budget cuts.

In the end, beyond either a heading off of the impending crisis, or the consequences of default, the current debate will likely frame debt limit discussions for years to come.

“Increasing the debt limit to accommodate further borrowing allows federal operations to continue as they otherwise would have,” the Congressional Research Service said in a recent report.

“Larger increases in the debt limit allow more time to enact changes that adjust budgetary trends, but could reduce the effect of the debt limit on budgetary discussions if policymakers feel less constrained by the new debt limit level,” it continued. “Smaller debt limit increases potentially offer a greater role for the debt limit legislation in budgetary policy discussions, but may lead to more frequent debt limit activity.”

On Tuesday, Biden recalled the warnings of past presidents against “playing with the national debt,” most notably, former President Ronald Reagan.

“[So] why are they doing this? What’s the purpose?” Biden asked during his Rose Garden remarks.

“The speaker talked about limited spending, which sounds good. … And, by the way, I was able to cut the deficit by $1.7 billion in two years. And if we pass the budget I’m proposing, we’ll lower spending way beyond that … just because of the way we’ve … empowered Medicaid to negotiate prescription drug costs.

“But let’s take a closer look at what he didn’t say,” Biden continued.

“Critical programs for hardworking Americans, the ones they count on, would be slashed starting next year if he has his way,” he said. “He didn’t tell you the leading House Republican proposal would cut all programs and discretionary spending by 22%.

“It would mean higher cost for child care, higher cost for preschool, higher cost for college.  Two hundred thousand children would lose access to Head Start slots, and even more would lose access to child care altogether. 

“It would mean higher costs for housing, especially for older Americans, for veterans, people with disabilities and families with children; longer wait times for Social Security and Medicare benefits, robbing seniors of their healthy meals; 30 million fewer veteran outpatient visits, leaving our brave warriors unable to get check-ups, mental health services and treatment for substance abuse disorders,” Biden said.

“Congress just passed the PACT Act, which I was very proud of — and it was bipartisan — to help veterans exposed to toxic burn pits, like my son. These cuts will make it harder for us to meet that sacred obligation to protect those we send into harm’s way and care for them when their families — when they return home.”

Biden went on to say that some proposals making the rounds would deny treatment to tens of thousands of people suffering from opioid addiction, and 10 million access to food assistance programs.

“Another thing the speaker didn’t tell you is the MAGA Republicans in Congress are still supporting over $3 trillion in tax giveaways that overwhelmingly benefit the wealthiest Americans and the biggest corporations.”

Biden said the cuts McCarthy and House Republicans are seeking won’t reduce the deficit, but will “just pay for the rest of the MAGA Republican agenda: massive tax cuts, giveaways that gear up for the rich and large corporations who have acknowledged they don’t need them at all. 

“Folks, if MAGA Republicans in Congress won’t ask the wealthy or big corporations to pay a dollar more in taxes but they’ll make a 22% cut to programs across the board like education, scientific research, basic services people rely on, then they should tell the American people what that means and why they’re doing it,” the president said. “It means they want to go back to the same old trickle-down economic theories of the past while we and the economy [are] sidelined.”

On Wednesday afternoon, during an appearance at a union training facility in Accokeek, Maryland, Biden delivered essentially the same message.

In both instances, he urged McCarthy and the House Republican leadership to “take the threat of default off the table.”

“Pass my budget, and if not, I’m ready to have a separate negotiation over the budget once Republicans present their plan,” he said. “If they don’t want to pass my budget, let’s at least argue about what they don’t like about it and let’s vote on it.”

McCarthy responded with a nine-minute speech on the House floor Wednesday in which he said his conference is moving forward with what he now calls the “Limit, Save, Grow Act of 2023.”

The 320-page bill follows the same contours the speaker discussed in New York on Monday, though with a few more details.

The Republican plan would increase the debt limit by $1.5 trillion or until the end of March 2024, whichever comes first, McCarthy said.

The bill includes $4.5 trillion in savings by cutting discretionary spending to fiscal year 2022 levels and limiting the growth of future spending. 

It would also, as McCarthy had previously outlined, claw back unspent COVID-19 funds, cancel the Biden administration’s student loan forgiveness program, rescind new funding for the IRS and enact work requirements for federal aid programs.

“American people have elected a divided government. And our government is defined by compromise. That’s why the House, the Senate and the White House should be negotiating a responsible debt limit increase right now,” he said.

“Washington is on the clock. But what are the Democrats doing? President Biden is skipping town to deliver a speech in Maryland rather than sitting down to address the debt ceiling,” McCarthy said. “Now Sen. Schumer, he’s just missing in action.

“Rather than find common ground with the House, Sen. Schumer is having the Senate vote on a nonbinding resolution commending and congratulating the University of Connecticut men’s basketball team for winning the 2023 Men’s Basketball Championship,” he continued. “Now, that’s not all Sen. Schumer has been doing. Just this past month he had the chamber approve March being Maine Maple Syrup Month. Talk about taking on big issues. I wonder what May’s month will be. 

“If Washington wants to spend more, it will have to come together and find savings elsewhere, just like every household in America,” McCarthy added. “President Biden has a choice. Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation’s history.”

Dan can be reached at [email protected] and @DanMcCue